EU clarifies ban on carrying and insuring Russian fertilisers and coal applies worldwide

The EU has made clear to EU-based shipowners and the international marine insurance community that its new rules on carrying Russian fertilisers, coal and other solid fossil fuels apply to shipments to non-EU countries and EU member states. It also stated that any financial assistance provided to transfer such goods to any destination from Russia, including insurance and reinsurance services by an EU-based insurer or reinsurer, would breach EU sanctions. The International Group of P&I Clubs (IG) sought clarification on the new rules, introduced through Articles 3i and 3j, as the wind down period allowing contracts agreed before April to complete came to an end. The UK Club explains the new position in a circular to members. “The IG had originally thought that the rules only applied to the export of fertilisers, coal and other solid fossil fuels from Russia to EU member states and did not include non-EU states. The IG has told its members, however, that the EU has stated that the ban applies to all countries,” it says. The UK Club says that it seemed clear to P&I clubs and their advisors on a plain reading of both article 3i and 3j that prohibitions around carrying Russian fertilisers, coal and other solid fossil fuels only related to imports into the EU and not to carriage to non-EU destinations. The UK Club says, however, that FAQs were issued by the EU on 10 August that cast “significant doubt” on the previous interpretation of the wording of Articles 3i and 3j. The IG consequently sought immediate clarification from the EU regarding the meaning of these latest FAQs, the scope of the EU prohibitions and potential impacts. “The EU have made it clear to the IG that whilst the reference to ‘import’ in the articles is indeed just limited to import into the EU, the other restrictions on direct or indirect transfers are intended to equally apply to non-EU destinations. It is therefore now the case that the involvement of an EU entity in the carriage of Russian fertilisers and coal or other solid fossil fuels to any destination whatsoever and whether inside or outside the EU would be in breach of EU sanctions,” explains the UK Club circular. “Furthermore, the EU Commission has clarified to the IG that the prohibition on the provision of ‘financial assistance’ in sections (2)(b) of both Article 3i and 3j and which includes insurance and reinsurance services prevents any entity subject to the jurisdiction of the EU from providing insurance and reinsurance for the carriage of Russian fertilisers and coal and other solid fossil fuel cargoes regardless of destination,” it adds. The UK Club explains that most of the P&I Clubs that make up the IG fall under the EU’s jurisdiction. Meanwhile, all IG Clubs, including those that are domiciled outside the EU, rely on a reinsurance programme that is heavily dependent on reinsurers domiciled within the EU, it adds. Therefore it warns: “If any of the IG Clubs are prohibited under these sanctions from contributing their share of any pool claim, the individual member will bear the shortfall in accordance with their club's sanctions rules. The same principle will apply for claims above $100m if any EU domiciled reinsurers on the IG reinsurance programme are prohibited under these sanctions from paying the claim.” “With no suggestion of the EU being willing to grant a further wind-down period to allow the consequences of these latest FAQs to be absorbed by industry, the impacts as set out above for members involved in these trades have immediate effect. Any members with questions are strongly encouraged to contact the club,” it adds.

EU clarifies ban on carrying and insuring Russian fertilisers and coal applies worldwide

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